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South Korea issues arrest warrant for cryptocurrency developer Terra and Luna

A court in South Korea has issued an arrest warrant for Kwon Do Hyun or Do Kwon, founder of the cryptocurrency ecosystem Terraform Labs. He and five others were accused of violating the national capital markets law.

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Authorities said Terra and Luna tokens are equivalent to securities, meaning the Terraform Labs team committed fraudulent transactions and violated financial markets laws. Do Kwon and his team are now in Singapore, Interpol will track them down and their passports will be revoked.

Do Kwon was also involved in the launch of the cryptocurrency Luna. The collapse of the Terra ecosystem in May led to the collapse of TerraUSD and Luna. The prices of both tokens plummeted to near zero, with assets in them valued at $60 billion.

Analyst FatMan said Degenbox's $UST-$MIM strategy on the Abracadabra platform allowed Do Kwon to take more than UST2.7bn out of Terra in a matter of months. He said MIMs were exchanged for USDT and USDC and then sent to the addresses of centralised exchanges including Binance, KuCoin and Huobi. FatMan called on Terraform Labs to explain the purpose of these transactions, disclose the sources of the funds to the Luna Foundation Guard reserve, and publish details of the transactions the company has made to stabilise the UST price.

At the time, Do Kwon said he was only receiving a "nominal cash salary" at Terraform Labs, and had delayed receiving most of the "founder tokens" because he didn't need them.

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Already at the end of May, the Terraform Labs team proposed restarting the network. Leading cryptocurrency exchanges, including Binance, Huobi and Kraken, announced their support for the new blockchain. Do Kwon himself said he believed Terra 2.0 would succeed and did not consider himself a fraudster. He assured that he had lost almost his entire fortune because of the collapse of Terra, as he himself had full confidence in the sustainability of UST. Meanwhile, investors have accused Terraform Labs and Do Kwon of making false claims about the stability of UST.

Investigations into the collapse of Terra are ongoing in South Korea and the US. South Korean prosecutors have banned Terraform Labs employees from leaving the country.

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